Starting on April 1, any foreigner in the world who has a
specialized skill with a college degree or higher will have only
one day to apply for a U.S. work visa for fiscal year (FY) 2009.
After that, many experts predict that the cap for H-1B visas will
be met, requiring foreigners to wait another 12 months before
applying again and leaving American companies without needed
workers. H-1B visas are given to highly educated foreigners who are
sponsored by American employers. As the law currently stands, a
maximum of 65,000 visas is given each fiscal year.

Admitting such a low number of qualified workers hurts the
high-tech industry in the United States and pushes the smartest
people to work in competing countries like China. Some U.S
companies that are desperate for workers, like Microsoft, have
moved certain branches to Canada and Mexico.

Representatives Gabrielle Giffords (D-AZ) and Lamar Smith (R-TX)
have recognized the gravity of the problem and have introduced
similar bills raising the cap for H-1B visas. Raising the cap is a
necessary first step, but more should be done to make H-1B visas
flexible. Their number should reflect the economy's need for
high-tech workers-not arbitrary limits set by Congress.

H-1B Visas

As with other work visas, employers must navigate highly
complicated procedures to hire workers on an H-1B visa. The
application process involves several U.S. departments and is often
a bureaucratic nightmare. Despite these obstacles, the visas are
popular with employers.

Congress has tried to fix the H-1B cap before, but these fixes
were temporary and largely ineffective. The cap was raised to
115,000 visas in 1999 and to 195,000 visas in 2001. Because of the
pitfalls of navigating the application process, combined with the
economic slowdown of 2002, not all of the visas authorized were
issued in FY 2003. As a result, an excess of 117,000 visas was
discarded at the end of the year.

Congress lowered the cap back to 65,000 for FY 2003. Since that
year, employers have used every authorized visa. Employers have
also exhausted the annual H-1B visa supply at a faster rate. In
2007, employers used up the entire quota less than a day after U.S.
Citizen and Immigration Services (USCIS) started accepting
applications, and USCIS conducted a lottery to determine which
workers would receive visas.[1]

Not all H-1B visas are counted against the cap. The first 20,000
H-1B visas issued to workers with a master's degree or higher are
not deducted from the 65,000 cap.Employees of universities are
similarly exempt. On the other hand, Singapore and Chile have a
guaranteed 6,800 visas, which are counted against the 65,000
cap.

Insourcing Jobs

Increasing the cap on H-1B visas creates new jobs for American
workers, not just H-1B immigrants. Employees do not compete for a
fixed number of jobs so that when more H-1B workers come to the
United States, an equal number of Americans lose their jobs.
Instead, businesses create jobs when they grow and shed jobs when
they shrink.

Currently, the economy has a severe shortage of workers for many
high-skilled positions. The unemployment rate in computer and
mathematical occupations, like computer programming, was 2.1
percent in 2007-essentially full employment after accounting for
workers between jobs.[2]
There are not enough high-tech workers in America to fill the jobs
that employers want them to do. By increasing the H-1B cap,
Congress would allow companies to fill vital positions and enable
them to expand within the United States, which avoids the problem
of companies outsourcing work or moving overseas.

Take the example of an engineering software company that hires
an engineer and a software developer on H-1B visas. Without those
key workers, the company could not expand. Because it hired those
key workers, however, the company grows and creates many new
domestic jobs: software programmers, software salesmen, and
technical support staff.

A study by the National Foundation for American Policy found
that the average S&P 500 company creates five new domestic jobs
for each highly skilled H-1B visa employee it hires.[3]
By raising the H-1B cap, Congress "insources" jobs, allowing
companies to fill vital positions and expand their operations in
America instead of moving overseas. This benefits both American
workers and the U.S. economy.

Getting It Right

Representative Smith's bill, the Strengthen United States
Technology and Innovation Now (SUSTAIN) Act (H.R. 5642), and
Representative Gifford's bill, the Innovation Employment Act (IEA,
H.R. 5630), would raise the H-1B cap. The SUSTAIN Act would only
temporarily raise the cap to 195,000 for FY 2008 and FY 2009, while
the Innovation Employment Act would initially raise the cap to
130,000 and allow the cap to increase the following year if it is
reached.

The H-1B visa program is unlike other temporary worker programs
because the visas apply to highly skilled workers only, and it thus
has separate concerns and benefits. The regulations for low-skilled
work visas should not apply for H-1Bs. Raising the cap for a fixed
number of years fixes this problem only temporarily and would
require Congress to revisit the issue in the coming years. Instead,
Congress should:

Return the cap to its previous amount of 195,000.

Make the cap flexible. Congress should ensure that the
caps are based on the needs of the marketplace. If the caps are
met, there should be an increase the next year. In addition, any
unused visas from the previous fiscal year should be carried over
to at least the next fiscal year.

Conclusion

H-1B visas are used by America's high-tech industries to hire
skilled foreigners to work in the United States. The ability of
these companies to hire employees should not be dictated by an
arbitrary number passed by Congress. The current cap is too low,
and Congress is not able to change it quickly enough to match the
economic trends. Reforms in H-1B visas must be made to ensure that
the best and the brightest are working in the United States. No
good could possibly come from keeping them out.

James Sherk is Bradley
Fellow in Labor Policy in the Center for Data Analysis and Diem
Nguyen is Research Assistant in the Douglas and Sarah Allison
Center for Foreign Policy Studies, a division of the Kathryn and
Shelby Cullom Davis Institute for International Studies, at The
Heritage Foundation.